Havells plans new forays; expand CFL capacity

Havells plans new forays; expand CFL capacity

New Delhi: Electrical components maker Havells India will invest Rs120 crore to double its compact fluorescent lamps (CFL) capacity in two-year, a top executive told Reuters.

Havells’s plant in India will produce 10 million CFLs in the next two-year, as the company looks to leverage its premium Sylvania brand, which was launched in India recently, Anil Gupta, joint managing director, said in an interview late on Thursday.

“We are currently in the process of expanding capacity. Construction is going on. In two-years, we will double the capacity," Gupta said.

Just weeks ago Havells said it has doubled manufacturing capacity of its cable & wire segment at Alwar plant in Rajasthan and doubled the plant area to 90 acres (36.42 hectares).

Havells bought Germany’s SLI Sylvania in 2007 for €227.5 million. The loss-making unit has been turned around after an aggressive restructuring plan.

“We did a restructuring to bring down the cost structure. At any level or stage, the company should at least break-even. It took us one and a half years," Gupta said.

The company had to close some Sylvania plants and move production to low-cost countries to achieve that, he added.

Gupta expects Sylvania to grow 15-20% in Latin America, while growing 5-7% in Europe for the next 1-2 years.

“Cumulative growth (at Sylvania) will be about 7-8%. Seventy percent of Sylvania sales is in Europe," he said.

Sylavania contributes about half of Havells’ total revenue. It posted continued losses following the global financial meltdown in 2008, but broke even in July-Sept quarter. It is expected to post continued profit now onwards, Gupta said.

Sylvania, which had negative EBITDA (income before interest and taxes and depreciation and amortization) margin two-year back, will show margins of 6.5-7% this year, he said.

Revenue at Havells would continue growing at 20-25% on a stand-alone basis for the next 2-3 years, Gupta said, adding at that rate it may double revenues in 3-year, he added.

“If a building is being made, if an industry is being made, our lighting will go, our switchgear will go. We are very upbeat about all product lines."

Havells is already present in about 50 countries globally, and it is now looking to enter new countries.

“We are not present in South East Asia in a big way. We are not present in Africa. We are looking at these countries to enter," Gupta said.